00:03
Hello, let's look to this question.
00:09
Here we have that this company's stock has an expected return of 14%.
00:19
And also the stock's dividend is expected to grow at a constant rate of 8%.
00:31
And it currently sells for 50 % a share.
00:35
So, this means that the stock's dividend will grow at this constant rate.
00:50
For now it's equal to 50%.
00:52
The stock is 50%.
00:55
So what will be the price of this stock next year? so since it's given that the constant rate of the growth is 8%, we multiply this by 1 .108, which is 8%.
01:24
And if we calculate, it will be equal to 54.
01:30
That's all we can do with these numbers.
01:34
So let's look to the answer to options.
01:38
A, the stock's dividend yields 8%.
01:46
Well, we don't know about this.
01:48
There is no information about this.
01:54
8 % is the constant rate of growth of this dividend, but we don't know how much exactly stocks dividend yield.
02:02
So we don't have information, so a is not correct.
02:06
V, the current dividend per share is $4 .00...